Changes to news media support package welcome, but more needed, advocates warn

News media advocates say changes to the government’s $595-million support package won’t be enough to help the industry weather the COVID-19 pandemic.

Bob Cox, publisher of the Winnipeg Free Press, said he welcomes long-awaited changes to the government’s nearly two-year old financial assistance plan, as problems in the original draft made it unworkable and stalled funding that was supposed to begin in January 2019. But, he said the program was created for an economic landscape where publishers could also rely on advertising revenue, which has since been decimated by the coronavirus pandemic.

“We’ve got an old problem fixed, but we’ve actually got to talk about a new one already,” he said in an interview with iPolitics Monday.

Cox said revenue at the Winnipeg Free Press has fallen over 30 per cent since mid-March, and he’s heard revenue dropping 40 per cent elsewhere in the industry.

“Unless you’re a company that relies entirely on readers for your revenue, you’re in a lot of trouble,” he said.

A release from the Department of Finance on Friday said adjustments to the media sector’s tax measures would ensure they achieve their “initial objectives.” The changes include include allowing news publishers and media organizations that receive support through the Aid to Publishers grant of the Canada Periodical Fund to qualify for the Canadian journalism labour tax credit, as well as enabling the Canadian journalist labour tax credit to be allocated to active members of a qualifying journalism organization that is a partnership, among others.

Cox previously told iPolitics his corporation was unable to receive funding from the media bailout because it’s a partnership — a business operation between two or more individuals who share management and profits — and it has no way of receiving the tax credit as partnerships don’t file tax returns.

While he said it’s “fantastic” the government is making these changes, he stressed that media organizations are surviving in the pandemic because of the federal government’s emergency wage subsidy program, which pays back 75 per cent of an employee’s wage.

In contrast, the media hiring credit, known officially as the Journalism Labour Tax Credit, allows Qualified Canadian Journalism Organizations (QCJOs) to apply for a 25 per cent refundable tax credit for salaries or wages of eligible newsroom employees from Jan. 1, 2019 onward. The credit is subject to a cap of $55,000, for a maximum tax credit of $13,750 per employee.

While this could have significantly helped the industry before the coronavirus crisis, Cox said industry players don’t think advertising revenue will return for at least a year after the pandemic, if at all, and the 25 per cent credit simply won’t be enough to offset this loss.

‘That’s not enough so save news media in the predicament we’re currently in,” he said. “Longer term, there are bigger programs that have been created by COVID,” he said.

Ed Greenspon, president and CEO of the Public Policy Forum, a non-profit that examines policy issues, and the former Globe and Mail Ottawa bureau chief, said the industry has lost two thirds of its revenue since the 2008-09 financial crisis.

A report from Statista found that advertising revenue for the newspaper industry stood at $3.43 billion in 2003, just a few years before the financial crisis, but more than halved to $1.63 billion by 2018.

“This is an industry that can’t weather a recession,” Greenspon added. “It’s too close to the edge already.”

Greenspon said the federal government’s efforts are best spent fixing the program, rather than designing a new one, noting how long it takes to create an effective policy framework.

He said the government should start by paying out the media tax credit money from 2019 “and get it out the door very quickly” so companies can address a lack of cash flow. He also said the government could start paying out the 2020 money early to help sustain media organizations, noting these changes won’t cost the government more than what’s already been promised to the journalism sector.

Cox also said the slow flow of funding from the federal government to the industry hasn’t yet been addressed, and would like to see the money from 2019 paid out quickly.

“That’s what really matters, and there’s this whole question of urgency which still is not addressed,” he said. “That’s what I’d really like to see.”

Camille Gagné-Raynauld, press secretary for Heritage Minister Steven Guilbeault, said the government is aware the coronavirus pandemic is having a significant impact on Canada’s news media. She said the government has announced adjustments to the journalism tax credits to ensure the measures align with policy intent and help news organizations engage in original written news content.

“Our primary goal with these adjustments is to provide journalistic organizations with greater certainty towards the continuity of their activities and the means to plan ahead for their future,” she said in an emailed statement to iPolitics. “Our government remains committed to supporting our newsrooms while respecting the core principle of journalistic independence.”

Another potential boost to the sector, Greenspon said, would be for the government to adjust the subscription tax credit from 15 per cent to 50 per cent, even if on a temporary basis. The credit encourages Canadians to subscribe to a media outlet by offering a 15 per cent non-refundable personal income tax credit for digital news subscription costs paid to a QCJO, from anytime after 2019 to before 2025.

Greenspon said increasing the credit might actually encourage people to make a decision to pay for journalism at a time when the industry needs it, but also when people need to stay informed. As the program currently stands, he said 15 per cent is “too low a number to change behaviour.”

Greenspon said it’s likely there will be a bigger solution needed after the five-year tax credit programs ends.

He recommended the federal government create a levy on advertising sales by distributors, referring to platforms like Facebook, Google, and Twitter. He said the levy could be a mechanism to fund organizations who are creating journalistic content, paid for by those who profit from this work but are not investing in it.

He said a similar program already exists, pointing to the five per cent fee cable and satellite companies contribute to the Canadian Media Fund.

“We’ve crossed that bridge, philosophically, many years ago in Canada,” he added.

Greenspon said it’s important to make the levy principle-based, rather than just taxing Facebook and Google. He also said the solution would be much better than for democracy and public perception, because publishers wouldn’t be beholden to the government, but would be funded through a private-player to private-player system.

Cox also said the industry needs a solution aside from the nearly $600-million media bailout.

“The conversation is now, what bigger program is needed for news media, to try and save news media in Canada,” he said.